Sarvesh Chandra, Chairman - This appeal is directed against Adjudication Order No. SDE (R) III/38-40/93 dated 31-3-1993 under which a penalty of Rs. 2,50,000 has been imposed on the appellant for contravention of section 14 of the Foreign Exchange Regulation Act, 1973 (âthe Act) on the allegations contained in Show-Cause Notice (SCN) No. 1. A further penalty of Rs. 50,000 has been imposed on the appellant for the contravention of section 9(1)(a) of the Act on the allegations contained in SCN II. The appellant was also served with another Show-Cause Notice, viz., SCN III under which he was charged for contravention of the provisions of section 16 but he was exonerated of the charge.
2. Shri Mittal, the learned counsel for the appellant, pleaded, at the outset, for dispensing with the requirement of pre-deposit on the ground that the impugned order is ex facie untenable. He elaborated that as stated by the learned Adjudicating Officer himself the allegation of contravention hinged on the question whether the appellant at the relevant time was a person resident in India. If he was not, all the charges would fail. He submitted that the conclusion of the learned Adjudicating Officer that the appellant was a person resident in India in terms of section 2(p)(ii)(c) of the Act is solely based on the assumed deposition of the appellant under section 40 of the Act that âafter having stayed in Iran in 1983 he made an application for joint venture and that he returned to India for goodâ. The conclusion is, therefore, based on assumed facts which were contrary to the facts on record. He further submitted that the support sought by the learned Adjudicating Officer from the Explanation in the Notification GSR 839 was also misplaced as the Explanation relates to foreign citizens and not to Indian citizens resident abroad. Therefore, Shri Mittal submitted that the impugned order is ex facie untenable and it would cause undue hardship to the appellant if he is compelled to pre-deposit the amount of penalty to pursue his right to appeal, particularly when the order has been challenged on merits also on these very grounds.
3. Dr. Shamsuddin for the respondents submitted that no doubt the finding of the contravention on the part of the appellant depended on the status of the appellant in 1983 being a person resident in India but since the right to appeal under section 52 of the Act is conditional, that is to say, it is available on the condition of pre-deposit, the appellant be directed to deposit the amount of penalty before his appeal is taken up for consideration on merit.
4. We considered the submissions made by the parties and decided to dispense with the requirement of pre-deposit as we found that the impugned order, for the reasons advanced by Shri Mittal, is prima facie untenable. We, therefore, heard the parties on merits of the appeal. This order disposes of the appeal on merits.
5. Elaborating his point that the learned Adjudicating Officer erred on facts Shri Mittal submitted that what the appellant had deposed in his statement under section 40 was, âthe application for collaboration was made approximately in 1983. My intention was to permanently settle in India after all approvals are obtained.â Shri Mittal submitted that it is, therefore, clear from the perusal of the appellants statement that what the learned Adjudicating Officer assumed to base his conclusions on was totally contrary to what the appellant had actually deposed. He submitted that on this ground alone the impugned order is liable to be set aside.
6. Regarding GSR 839 Notification, Shri Mittal submitted that the Explanation in that Notification is for the purpose of interpreting the expression ânot permanently settled in Indiaâ occurring in clauses (iii) and (vi) below the proviso. He pointed out that the expression ânot permanently settled in Indiaâ in those clauses is in respect of foreign citizen and not to in respect of Indian citizens resident abroad. Shri Mittal submitted that the said Explanation is totally irrelevant for determining the status of the appellant who never acquired foreign citizenship.
7. Shri Mittal submitted that the duration of stay in India cannot by itself determine the intention of a persons status. In support he relied on the judgment of the Karnataka High Court in the case of Enforcement Directorate v. Father J.M. Stenvense. In that case, the respondent who came to India as a religious priest in 1948 and in spite of having stayed in India up to 1965 was held to be non-resident.
8. Shri Mittal finally submitted that the appellant decided to stay in India for an indefinite period only in November 1986 when he received the final approval as can be seen from the letter of the RBI dated 15-11-1986 at p. 35 of his paper book. Before that, even in February 1986, he was asserting that he was an NRI as can be seen from his letter dated 26-2-1986 at p. 28 of the paper book, which is addressed to DGTD, Ministry of Industry. Thereafter, within the prescribed period he instructed the foreign bank to remit his funds to India which the foreign bank did on 29-12-1986. Thus, according to Shri Mittal, the appellant fully complied with the requirement of section 14 and the Notification issued thereunder and the question of any contravention as alleged or otherwise does not arise. He contended that the impugned order is totally unsustainable and contrary to the factual evidence on record; it discloses application of mind to assumed facts which are false and non-application of mind to the relevant evidence on record.
9. Dr. Shamsuddin who appeared for the respondents did not dispute that the charges preferred against the appellant under SCNs I and II (he has already been exonerated of the charge under SCN III) hinged on the question of his status. This is accepted in the impugned order itself. He submitted that what is relevant is the requisite intention of the appellant at the relevant time. He submitted that the learned Adjudicating Officer has expressly stated, before recording his findings, that he had gone through the facts and records of the case. Therefore, there is no reason to contend that he has not considered the evidence on record, he referred only to the statement under section 40 and the Explanation in the Notification No. GSR 839. In fact, according to Dr. Shamsuddin, there were two other facts not denied by the appellant, which show that he intended to stay in India for an indefinite period. One was the fact that he imported a mercedeze car while he was in India for which he paid by transferring foreign exchange from his foreign account and he closed one of the foreign accounts. These actions on the part of the appellant, according to Dr. Shamsuddin, disclosed his intention to stay in India for an indefinite period. He submitted that the statement made in the collaboration application was made by the appellant only with a view to take advantage of his previous NRI status but it can be legitimately inferred from the two actions mentioned by him that the appellant would have stayed in India even if his application had not been approved. Dr. Shamsuddin contended that the learned Adjudicating Officer has, therefore, rightly concluded that the appellant was a resident Indian at the relevant time though he has not referred to all the evidence on record to arrive at that finding. He pleaded that the impugned order should be upheld and the appeal rejected.
10. We have carefully considered the arguments elaborately made on behalf of the parties. Dr. Shamsuddin has made the submission that the impugned order should not be set aside merely on the ground that the evidence expressly discussed by the learned Adjudicating Officer does not sustain the finding if he succeeds in showing that the other evidence on record can sustain the findings. Without accepting that the submission, in our opinion, it does not help the respondents. Dr. Shamsuddin did not dispute that there is no prohibition for an NRI to import a foreign car by making payment from his foreign accounts and on payment of customs duty. The appellant could have either sold the car in India if permitted or he could have taken it along with him, if his application was not approved. It is not the case that the car imported by the appellant could not have been exported or could not have been used in foreign country. Therefore, import of mercedeze car by the appellant cannot determine his intention to settle down in India for good. Same is the case with repatriation of foreign exchange by closing down one of the foreign accounts. The Act does not require that an NRI can close his foreign account(s) only when he finally returns to India and after he becomes a resident Indian. It is to be noted that the appellant did maintain his major account in foreign bank until he received the approval of his application for foreign collaboration. Therefore, these two actions brought out by Dr. Shamsuddin have no force. Dr. Shamsuddin also made the submission that the statement made by the appellant regarding his NRI status in the application for collaboration was only with a view to take advantage of his NRI status. In our opinion, this submission is also devoid of force.
11. It cannot be disputed that a mere statement or declaration by a person claiming to be an NRI, such as in reply to any interrogation under section 40, would not be sufficient to establish his status as claimed by him. The intention of a person to stay in India for an uncertain period as contemplated in section 2(p)(ii)(c) has to be gathered by actions, conduct and such other circumstances as may show his intention, that is to say, whether he intended to repatriate from abroad for good and settle down in India. The mere fact of an NRI returning to India for the duration for which he stayed in India is not adequate to determine the said intention. Those facts could constitute only the first step towards making an inquiry into the issue.
12. The circumstantial evidence in the present case is the fact of the applicant having made an application as an NRI for collaboration approved in 1993 itself and the fact that he continued to hold German residential permit and frequently visited that country until he received the final approval for collaboration in November 1986. This circumstantial evidence stands substantiated by the fact that he applied on the Form prescribed for NRI and furnished the requisite particulars of his being an NRI in that application. It is also substantiated by the entries made in his passport. If the applicant has taken advantages as submitted by Dr. Shamsuddin which were under the Government policy available to an NRI, there is nothing wrong in availing of those advantages. If he has done that, it only supports his intention to remain NRI at least until the approval is granted. We fail to appreciate as to how this fact can indicate his intention to return to India for good in 1983. What Dr. Shamsuddin seeks to plead is contrary to documentary evidence on record as totally unacceptable. We, therefore, find full force in Shri Mittals contention that the evidence available on record can lead to one inference that the applicant was a non-resident at the material time. This conclusion is corroborated by the applicants statement recorded under section 40.
13. We have also seen the statement of the appellant recorded under section 40 and the Notification GSR 839. We find force in Shri Mittals submission, for the reasons advanced by him, that the contrary finding arrived at by the learned Adjudicating Officer is unsustainable as it is backed by the appellants admission which is factually wrong and based on false assumptions. We are also inclined to accept Shri Mittals submission that the Explanation in the Notification GSR 839 is not attracted in the case of the appellant as that Explanation is in respect of foreign citizens and the reliance on that Explanation by the learned Adjudicating Officer to fortify his conclusion was misplaced.
14. In view of the above we have no hesitation in holding that the appellant at the relevant time was not a person resident in India. In view thereof the charges made in SCNs I and II against him cannot be sustained as those charges can be made only against a person resident in India.
15. In the result, the appeal is allowed and the impugned order is set aside.